tv The Journal Editorial Report FOX News May 19, 2012 11:00pm-11:30pm EDT
fiscal health? ♪ >> welcome to the journal, editorial report. i'm paul gigot, fresh from a fund raising swing through manhattan, but included a top at apartment of tony james. and president obama rolled out a long expected attack on republican rival mitt romney's ties to, well, private equity. the campaign released an ad blaming romney and former firm, boehner capital for the 2001 closing of gst steel in kansas city. >> i know how this works, why jobs come and why they go? >> and they were responsible, mitt romney was deeply involved in the influence that he exercised over these companies. >> they made as much money off it as they could and they closed it down and they filed for bankruptcy without any concerns to families or to the
communities. >> and can't handle stuff-- >> and joining the panel this week, wall street columnist dan henninger. assistant editor, james freeman and washington columnist kim strassel. >> you spent all week looking into the story the closing of that steel plant in kansas city. why don't you tell us what the facts are. the reality of what really happens? >> it's not really the ad. you have 1993, the steel industry is a wreck. hundreds of thousands have been laid off. companies losing billions of dollars and you have the plant in kansas city which i spoke to someone who was vice-president at the business before and after the bain acquisition. this plant was going to be closed back in 1993 unless they found the buyer. bain came in thought competitive edge and invested more than 100 million dollars. in the end it didn't work out. this was a heavily unionized business and they could not compete on the world market
when prices plunged in the 1990's, they ultimately went bankrupt, but bain did do, gave it an extra eight years of life. >> paul: and this plant would have closed without the investment from boehner capital? >> that's the argument of the vice-president there, of the business who was there before bain came in. couldn't sell it, we were going to closer. >> what about the larger story of bain, you spent months looking into it, the overall portfolio and investment, how well they did. is this a success story or a story of rapacious vulture vam tire, particular your adjective capitalism? >> there are capitalists who want-- there is a good story for romney if you want to tell. you keep waiting for him to come out and tell it. >> paul: what is the story? >> the story is by any measure, this is a wealth and a job creator over time.
and they backed staples, 90,000, and bright horizons child care and even the steel industry, steel dynamics, they basically created now employs thaws of people. >> another steel company. >> another steel company. even within the steel industry, bain appears to be a net job creator, how many people can say that in the steel industry? >> one of the things that private equity does, it investigates in companies that are down on their luck, that have maybe poor management, that nt aren't doing well and tries to turn them around. and at times it works, sometimes it doesn't work. >> so what does this ad tell us about the obama campaign? that ad, after listening to kim describe what actually happened, that ad is a piece of propaganda. okay? >> and he's talking about an event many years ago, because he cannot talk about the economy we've had in the here and now, the obama campaign is essentially going to be five months of propaganda. now, the thing about that, it
can work. and if mitt romney doesn't provide a fact and answer to this, he's going to be spun in a way he will not realize is happening to him. >> well, it's pretty clear that the obama campaign is trying to define romney right now, in this early stage of the general election campaign and go after him on the strength that romney claims for his campaign, which is, i know how to create private sector jobs. this ad goes right to the heart of that claim. how, how much impact could it have? >> well, you're right. he's invited it. what he's done, i can do this. and the obama campaign, liao being at your experience and taken the wrong lessons from your experience. you know how to shut plants down and extract capital from em this. the problem that mr. romney cases, he's not engaged on this, he seems to know the want to touch this issue and he's going to have to defend himself. the problem he may not want to get into a back and forth of the details, but what he needs
to talk about, the value of private capital, fact ind hoo risk taking and how an economy works and makes the case. if he doesn't, it's a huge claim left unanswered and goes to the heart of his credibility. >> let's show the ad that romney is running. the first big ad of the general election campaign. let's watch. >> what would a romney presidency be like? day one, president romney immediately approves the keystone pipeline creating thousands of jobs that obama blocked. president romney introduces tax cuts and reforms that will reward job creators not punish them. he begins the order to begin replace obama care with health care reform, that's what a romney presidency will be like. >> i'm mitt romney and approve this mission. >> and james? >> a don't answer the strategy, let's not answer the bain capital, let's not go in
that debate. go against obama on the economy, smart strategy? >> i think it's a good message for him. at some point he's going to need to defend his business career and i think he's got something there worth defending and for the community of organizers, the goal is not to destroy the company. you want to create that asset value just like if you're in private sector. >> obama is going to be running against jp morgan, the banks and-- >> dan, why play that game. why not do this and-- the campaign would argue, romney campaign we're going on offense and take it it him and independents want to hear that positive member. they doesn't want to get into a tit for tat against bain. >> the nature of it he'll have to do both and stand next to barack obama who is going to shove the financial system down his throat. he better have an answer. >> okay.
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>> u.s. and european stocks were down sharply this week in a growing concerns over the greek debt crisis, fears that the country will soon leave the euro zone caused a near run on banks in greece as greeks withdrew almost 900 million dollars in a single day. a caretaker was sworn in and tribune after no party could put together a majority after the splintered election. and joining us, wall street editorial board member, matt comiskey and the former columnist breath bret stevens. >> the size of buffalo. >> paul: why is everybody concerned. >> dallas. >> paul: it's a very small
economy and the worry is about contagion. if greece does have to leave the euro because it cannot pay its debt and the package and euros from europe, they will have to go back to the drachma, and a knock on effect against spain, portugal, perhaps on italy. suffering from a lot of the same problems that greece has had. >> paul: and will the knockon effects, okay, we're going to turn on the debt, portugal and spain. if one country can leave the euro, both can. or is it a banking problem? >> and markets say pressure on the bond market, but the other problem, people that have, you know, if you're portugese and you have your money in a portugese bank account and you see what happens in greece where they go to a drachma and jump the euro they'll convert the euro accounts into drachma and they'll wife out the savings of millions of people
and people will be surprised and do the same thing in portugal and spain. >> this is a tragedy. what's happening is a tragedy for the greeks and may also be the salvation of the rest of europe. if i were angela merkel, chancellor of germany be secretly wishing a greek exit from the europe. >> explain that. >> a small economy, 2% of the overall euro zone. the problem is the demonstration effect of greece. if greece leaded euro and converts to drachma, the economy goes into freefall and governments in spain and italy, hopefully in france where you have a new socialist president are going to take a look at what happened. >> it will be ugly. >> it will be ugly when countries leave the euro zone when they try to, sort of float on air and ignore fiscal restraint and it will care them and that's what the rest of the countries need. you know, in italy. you have a trillion dollar economy under mario monty and
trying to put together labor reforms and other reforms and getting a lot of push back from italian politics. they may look at what's happening in greece and say we don't want to go there. we do not want to become third world countries inside of europe. >> well, we should not believe or think that we're going to be disinterested observers to this process, we're going to get hit. europe has to go down before it can go up. probably on the brink of recession right now and france's economy grew not at all. germany only .5%. those germans western european banks hold greek debt. if that greek debt flattens, they're going to have the credit urines a-- and probably effect some of the american banks. >> barack obama and secretary geithner say europe should use the tools they have, the term of art, to solve the problems. they have them there, solve it. what does it mean.
>> if you want to do a stimulus, an obama type stimulus-- >> more government spending. >> trying revive growth through inflation. >> that's the european central bank, also, inflating. >> and germany isn't going to let them go for this for political economic reasons and the impact on the u.s. can also be overstated here. the banks have written off a lot of the greek debt already. you know, and sort of be a market reaction on wall street, i think they'll see them be felt. there are healthy economies in europe. germany has a fairly healthy economy. and doing fairly well. so, i think the trade, yes, maybe some american experts pay fall, but i don't see an impact. >> briefly, bret. >> nobody in europe is talking about the solution. they're talking about the tools, which is inflating their way out of the debt. stimulus spending and not talking about hab market
reform, breaking the baskets over the unionized forces and going over every country in europe and giving the entrepreneurs and until you get the formula, europe is continuing to find. >> still ahead, is california headed down the greek path? and news this week that its debt woes are worsening, will governor jerry brown's solution drive more of the middle class from the golden state? >> i don't like to tax anybody, but you've got to go where the money is. now's the time to move from where you are to where you want to go. look up. with u.s. bank let's get the wheels turning. use our strength & stability to open new opportunities.
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. >> we don't want to be greece, portugal. italy, ireland, or an england. they borrow too much and got too deep into their hole. >> paul: well, it may not be greece yet. but the fiscal problems, with jerry brown saying he faces a state putting deficit, almost twice the 9.2 billion he predicted in january along with a new round of spending cuts. the governor is calling for temporary increase in the state's sales tax and a seven year sur tax on californians earning $250,000 or more a year. will it-- and a urbn urban studies profesr from chat man, california. welcome to the program. >> nice to be here. >> so her states have seen revenues grow in this economic recover. what is ronning with california? why can't they do the same?
>> well, california has a lot more heavy topic, and now with facebook, people earning phenomenal amounts of money, the general class, small business and middle classes making less money. you have a facebook, and hewlett packard 30,000 layoffs. the fact is you have very high end success, but the middle class has been hollowing out and at least a decade and frankly, as governor brown said. that's where the inmo is. only how much money you can take from the very rich. they're good at hiding it. as you know, apple has moved a lot of financial reporting to other states and places where they don't have to pay the taxes. and so, you know, the middle class is a sitting duck, the problem is that sitting duck is the key thing that drives the economy. >> with he will, now i want to ask you about that, the governor says, look, we're
just taxing the rich. we're not hitting the middle class and you're saying it's not the rich despite that. the middle class. why is there so much pressure on the middle class that they're feeling? >> part of it has to do with coa coach, particularly on the coast. if you make $250,000 and have a family it's not rich ap san francisco, los angeles very expensive places to live and a lot of these people run small businesses, individual proprietors. they are-- they are a group that's very, very vulnerable and drive the economy. i don't see any way that we're going to make our economy better by continually raising taxes on, on middle class coloradans, and so what we're--
we are evolving to and i wrote about this in the journal, we are moving increasingly to a bifurcated society and much more so than the rest of the country and this step by governor brown will make it work. >> the rich will stay and the poor depend on government, and the middle, upper middle class salaries, they're fleeing to nevada and texas and idaho and arizona. is that the point you're making? >> yeah, i think that's basically what's happening. i mean, then what's happening, what we see in the population profile particularly on the coast, an aging population, not a lot of young people, know the a lot of young families. and l.a. in particular suffered a huge outmigration of families, basically what's happening is we see people coming to california, sometimes when they're young, but leaving when they get a
little bit older. and frankly, people aren't coming, our last year, according to the irs, we were right around where michigan is in terms of people, as percentage of people coming in. now, think about this. this is california the most beautiful state in the union, we have the best weather and still have some of the great universities, and we have great infrastructure, right on the pacific rim, all the things that should count for an upwardly mobile economy are here and we're gradually destroying it and by the way, i would say that taxes are not the biggest problems. the biggest problem is our regulatory environment enough to drive almost anyone crazy. >> paul: that's regulation on environment, regulation on energy, they have a cap and trade. sate cap and trade program which imposes those burdens on companies in the state even though the rest of the country doesn't have it, briefly, you voted for jerry i brown, has he been a disappointment? >> i, i didn't -- i was somewhat misquoted. i didn't quote for him last
time and didn't vote for either of them. i've known jerry i for a long time. longer than i care to admit, but i thought he'd be more innovative and tough. and he's at the end of his career, and he should be able to risk things riot now, and instead, he's playing it, you know, really much more like a conventional democratic politician and i don't think it's going to get us where we want. i think a lot of us thought jerry is smart, he's innative. willing to take risks and did it when he was a young man, for whatever reason, he's not as an older man. >> thank you for being here. we have to take one more break. wh he-- wh he-- when we i just want to give her everything. [ whistles ] three words dad, e-trade financial consultants. they'll hook you up with a solid plan. wa-- wa-- wait a minute; bobby? bobby! what are you doing man? i'm speed dating! [ male announcer ] get investing advice for your family at e-trade.
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week went their own way choosing their candidate for u.s. senate and turned into a classic primary, club for growth who flooded the state and they didn't like the front runner and the attorney general and backed their own guy, and the voters know a three-time loser for the senate and had his own baggage. we want none of the prove and went for a fresh face, state senator deb fisher. sent a message if you're coming into the state with primary drama better have somebody worth backing or we'll ignore you, too. >> bret. >> a 99-0, not a vote to name a post office after bob hope or easily vote. the senate's unanimous rejection of president obama's 2013 budget. a big mess for the president and the lack of seriousness of his governance, unfortunately rejected four other republican budgets as well. a miss for congress, too. >> paul: okay, matt? >> here is a like to the facebook ipo on friday. the biggest ipo of the new
company in history. they raised about 18 billion dollars and valued the company at 100 billion dollars nl 0 eight years after mark zuckerberg famously started this company in the college dorm roomment. do you have any shares, matt? >> i haven't been on the computer. to see you right heregigot, next week. . >> jon: on fox news watch. >> every day you receive a steady stream of sensationalism and scandal. stories with a message that suggests change isn't possible. >> jon: the president takes a shot at the media for only reporting bad news and an agenda, but when it comes to the issues which really matter, where is the good news and who is reporting it? was t